MARKETING: GETTING A BANG FOR YOUR BUCK?
Most small businesses that I work with have very little understanding of marketing. Most think that marketing is advertising and of course this is not true. Advertising, or Promotion, is a component of marketing but there are many other components of marketing such as Sales Promotion, Product/services that you are delivering, the Price that you are charging, where you are distributing the deliverables such as the Placement of the Product/services and of course let us not forget the People that are representing the company. Notice we have just defined marketing from a 101 Marketing Course-the 6 Ps of Marketing. Yes, this may seem very academic, but it is real. Everything we do in business reflects the business model and credibility of the company. Keep in mind marketing begins before we start our business and only stops when we close up or sell out.
Now that we have a preliminary understanding of what marketing is, we now must understand that not only is marketing a continuous activity that never stops but must be budgeted for. Again, most of the companies I consult with consider marketing an expense and in many cases treat it such. So, when budget time comes and revenue is down, so goes the marketing budget. Well, SHAME ON THEM! Marketing should not be a variable expense and should not be based on a percent of sales but should be a fixed cost that needs to be there all the time. This of course means that when revenue is up, marketing, as a percent of revenue will go down and the opposite is true if revenue goes down. I consider marketing as an investment and therefore we need to get a return on the investment (ROI). To understand the ROI it is important to measure results and responses and then perform metrics to evaluate the return.
Why is all this important? Because things are tough out there and small businesses need to learn new techniques and best practices to stay competitive. Most of the tools you need are free and some are even familiar but are not being used. Where do you put your marketing dollars and how do you make those choices? Is it determined by your emotions of liking a sales representative or a golfing buddy that you want to stay friends with, or you have always done it so why not continue, or your competition does it so why shouldn’t you? Many of the traditional marketing involves, direct mail, printing, TV, radio and environmental media. As budgets get tighter we find it more important to develop strategies that materially and directly contribute to the health of the company. Therefore, we need to be using measurements to determine the results of the dollars spent. Without using metric to understand the results, you are shooting in the dark. New methods of metrics are being developed as this column and is being written, therefore small business owners need to be up to speed on the opportunities and tricks to be able to eliminate the fuzzy and inaccurate marketing media assumptions.
After attending an event you could tell your CFO about all the people that stopped at your booth or you could tell your CFO about all the people that stopped at your booth and the amount of revenue you expect to add to the bottom line. With the development of skill and tools, small business can predict the additional profit of a marketing campaign.
In the next few months, I will be providing small businesses with many techniques and tricks they can integrate into their marketing plan and hopefully add value to what they are doing to give them a better understanding of the value of measuring their ROI of different media they may be using for their marketing. I will also provide logic and tools to help in the design and implementation of marketing decisions. Remember “Connecting your marketing spending to actual sales and revenue has always been a convoluted path, but never a more urgent one than today”.